Outsourcing the skincare manufacturing of your products may seem intimidating for you and your business, but as long as you make sure you have a legal agreement with your manufacturer, you should be adequately protected. However, there are many entrepreneurs who enter into the skincare manufacturing arrangements without any legal agreement in place. So here is a checklist for you to ensure you got everything you need to outsource skincare manufacturing for your products.
1. Create and sign legally binding contracts
Most skincare entrepreneurs only consider having a confidentiality agreement or non-disclosure agreement but you need to sign a performance-related contract with your manufacturer. If you are going to work with a manufacturer, refer to a commercial lawyer who has experience working with manufacturers. It will cost money to hire a lawyer, but you should view this as an essential investment for your business.
2. Protect your intellectual property
Your Intellectual Property (IP) is yours and you need to make sure that any legal agreements you sign will protect it at all times. If the manufacturer makes any tweaks to your formulation can it still be considered to be yours? If one day you decide to terminate your contract with this manufacturer and work with a different one, can you still use the same formula? Make sure that your legal agreements protect your IP and think through all eventualities before you sign a contract.
3. Discuss Good Manufacturing Practice
Talk to your manufacturer about GMP and make sure you are totally satisfied and in agreement with their interpretation of Good Manufacturing Practice. Ask to tour their facilities and get a feel for how they work. Go into detail. Ask very specific questions. Make sure you have a detailed checklist that covers all relevant points.
4. Agree where your manufacturer will source ingredients
When you outsource your skincare manufacturing, you will need to agree where your manufacturer will source their ingredients.You may have certain ethical or sustainability requirements that connect with the heart of your business, these are all the points you must consider when you decide where your supplier will go to get your ingredients.
Make sure you have an agreement in place that specifies what happens if you need to change suppliers. How will your manufacturer ensure consistency if they suddenly need to source their ingredients from another company or region? Will you receive a sample before approving any changes? Make sure you specify what will happen to any changes.
5. Create a formal brief
When you start working with a manufacturer, you should put together a formal brief which lists what you expect them to make. If you have not finalised your formulations and if you will be working together with your manufacturer to create the finished formula, then you will also need to agree on a brief that specifies which ingredients you want them to use, how you want your products to be preserved and which ingredients are banned. The more detailed you are, the less chance there is of any confusion.
6. Agree on a standard sample
Both you and your manufacturer should be clear on how your product will look, smell, function and feel. You will need to make a standard sample in the final packaging that you intend to use. You will need to agree with your manufacturer that this is the sample in the final packaging that you intend to use for your product. Furthermore, You need to make sure that your manufacturer knows that this is the sample they have to replicate each time.
In other words, before you outsource the manufacturing of your skincare products, you should agree on the texture, colour, viscosity and the fragrance of your formulation.
7. Agree on batch size and delivery times
You need to achieve an agreement on what your skincare manufacturing facility will deliver and when they will deliver it. Will you have regular batches manufactured or will they be manufactured when you need them? If the latter, how much lead time and notice do your manufacturer require before they can deliver your batch to you? You will have to be clear on how long these lead times are because if you run out of stock and then have to wait 3 months before your next batch is delivered, it will negatively impact your business.
Agree on the size of your batch. What is the minimum order quantity of products manufactured by your facility? Keep in mind that the fewer units you produce, the more they will charge. Most facilities do not go under 1000 units, so you will need to be prepared for a big capital outlay and you will need to be sure that you can sell them within a suitable timeframe.
8. Agree on which standards must be met
Are your products going to be organically certified? Or are you going to meet Halal, vegan, gluten-free or paleo requirements for instance? if your brand is going to be certified by any specific standards, then not only will your formulations have to meet their requirements, but so will the facilities where they are made.
You will need to discuss your certification needs with the skincare manufacturing facility that you choose. It is better to find a facility that is already certified to make organic products or Halal products or vegan products. That way they are already familiar with all the steps that they must take and won’t have to try doing anything new for your brand.
9. How you will deal with complaints or returns that relates to the formulation
Now that you are in business, at some point, you will undoubtedly deal with returns, complaints and refunds. But what will you do if you have to undertake a product re-call because your manufacturer got something wrong?What if your formulation is growing micro-organisms because your batch was accidentally contaminated? Who would have to take on the financial liability of a batch that had to be re-called and destroyed? These are some of the points that you have to consider as you put together your contract.
As you can see, there are many points that you have to consider before you outsource the manufacturing of your skincare products. Outsourcing is not for everyone, some formulators are keen to keep the integrity of their manufacturing process, in house. But if outsourcing is an approach that you want to take, you need to consider all these points in detail. Once you have freed up this massive part of your business, only then you will be able to focus on the marketing and sales of your brand.